As we have now beforehand reported, in early 2022, Congress handed and President Biden signed into legislation the Ending Compelled Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), a legislation that bans obligatory arbitration of sure sexual assault or sexual harassment claims. Since its enactment, we have now tracked a few of the procedural challenges employers face because of the legislation (see right here, for instance), and a current determination from the Eighth Circuit Courtroom of Appeals, Famuyide v. Chipotle Mexican Grill, Inc. et al., No. 23-3201 (eighth Cir. Aug. 5, 2024) provides one more wrinkle for employers adapting to the EFAA.
The EFAA provides staff the choice to void a pre-dispute arbitration settlement with respect to a lined dispute or declare (i.e., one involving sexual assault or harassment) that arises or accrues on or after the date of enactment of the EFAA, i.e., March 3, 2022. 9 U.S.C. §§ 401, 402(a). By the EFAA’s categorical phrases, employers can nonetheless pretty compel arbitration of lined claims that accrued previous to March 3, 2022, because the legislation solely applies prospectively. When, then, does a lined dispute or declare accrue for functions of the EFAA? Famuyide solutions that query.
Ms. Famuyide started working at a Chipotle Mexican Grill in Minnesota in Could 2021. She signed an settlement on the time she was employed requiring her to arbitrate all employment claims she might have towards Chipotle. Shortly after Ms. Famuyide began working, a coworker allegedly started to sexually harass her. The misconduct escalated and, in November 2021, Ms. Famuyide alleges that her coworker sexually assaulted her in a restroom at work. Ms. Famuyide reported the assault to her supervisor, who was initially inclined to fireside each staff however in the end didn’t achieve this. Unable to carry out her job duties, Ms. Famuyide took a go away of absence, however her go away was incorrectly keyed into the payroll system as a termination—one the corporate subsequently rescinded. Lastly, on April 20, 2023, Ms. Famuyide sued Chipotle below Minnesota legislation alleging harassment, retaliation, vicarious legal responsibility for the sexual assault, negligent rent and retention of the coworker, and intentional infliction of emotional misery.
Chipotle moved to compel arbitration, arguing that the harassment and assault occurred previous to the EFAA’s enactment date and thus the “dispute” was arbitrable. Chipotle asserted {that a} “dispute” arises below the EFAA when the underlying conduct happens—on this case, the alleged harassment and sexual assault. Alternatively, Chipotle argued that the dispute arose at the least by February 2022, when Ms. Famuyide’s attorneys despatched letters to the corporate indicating they had been investigating potential claims towards the corporate and inquiring as to its curiosity in a pre-litigation decision.
The district courtroom and the Eighth Circuit rejected Chipotle’s arguments. Noting that the EFAA doesn’t outline dispute, the Courtroom relied on the dictionary definition of dispute to imply “battle or controversy.” When the sexual assault allegedly occurred in November 2021, Ms. Famuyide didn’t assert a declare or reason behind motion towards Chipotle, thus there was no battle or controversy between the events that might have been referred to arbitration at the moment. Likewise, there was no “battle or controversy” on the time Ms. Famuyide’s letters despatched the “exploratory” letters to Chipotle about the opportunity of settlement. Regardless of sending letters warning Chipotle to protect related proof and inquiring as to the corporate’s curiosity in decision, the events had been nonetheless free to stroll away. Ms. Famuyide might have elected to not proceed with a authorized declare or the events might have resolved their disagreement by voluntary settlement. Thus, there nonetheless was not a “dispute” that could possibly be compelled to arbitration as of February 2022. The courtroom concluded that there was not a reason behind motion that might have been compelled to arbitration, if legally permissible, till Ms. Famuyide filed go well with, which didn’t occur till after the EFAA’s enactment. She was subsequently free to sidestep the arbitration settlement and pursue her declare, and resolve her “dispute” with Chipotle, in courtroom. The takeaway for employers is that, no matter when the underlying alleged misconduct occurred, a declare or dispute accrues for goal of the EFAA when an worker information a authorized motion. Since a hostile work setting declare could also be deemed well timed if the newest act of harassment falls inside the statutory window, which means sure misconduct that occurred previous to March 2022—and which employers might erroneously assume is topic to arbitration however the EFAA—might in truth be topic to non-arbitration litigation and the scrutiny that accompanies it, offered that the course of harassment continued after the EFAA’s enactment and is related to a well timed, post-EFAA harassment declare.